Moody's Investors Service changed the ratings outlook on the United States' government from stable to negative.
The long-term issuer and senior unsecured ratings of the U.S. have been affirmed at Aaa despite the negative outlook.
Higher interest rates and a lack of effective fiscal policy measures contribute to the negative outlook.
Moody's anticipates very large fiscal deficits in the U.S., significantly weakening debt affordability.
Brinkmanship in Washington and political polarization within the US Congress are highlighted as contributing factors.
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Moody's expects the U.S. to retain exceptional economic strength despite the negative outlook.
Deputy Secretary of the Treasury, Wally Adeyemo, disagrees with Moody's negative outlook, citing the strength of the American economy and Treasury securities.
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The article notes the looming threat of a government shutdown, with current government funding only until Nov. 17.
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House Speaker Mike Johnson plans to release a Republican government funding plan, but it faces challenges in the White House and the Democratic-controlled Senate.
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The White House attributes Moody's decision to Congressional Republican extremism and dysfunction.
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In August, Fitch cut the U.S. long-term foreign currency issuer default rating to AA+, citing expected fiscal deterioration and governance issues.
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Fitch notes that repeated debt-limit political standoffs and last-minute resolutions erode confidence in fiscal management.
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